Bank of England set to incur £150bn loss from bond sales after interest rate rises
Higher interest rates will force the Bank of England to make a loss of £150bn from the sale of bonds bought to shore up the UK’s financial system over the last 14 years – an increase from a £100bn deficit projected in April.
The bill will need to be paid by the Treasury out of current spending, hitting Whitehall departmental budgets, after successive chancellors failed to set aside funds to cover the losses.
Officials at the Bank expect the government to pay about £40bn a year in 2023, 2024 and 2025, roughly £10bn a year more than estimated in April.
Last year, two of the Bank’s former deputy governors suggested it should force bond buyers to accept a lower interest rate to reduce the Treasury’s bill, but this was rejected by the governor, Andrew Bailey.